Argentina Economic Forecast

Argentina Economic Outlook

December 7, 2017

President Mauricio Macri’s government scored an important political victory when it signed a landmark fiscal agreement with regional governors on 16 November. The deal aims to reduce Argentina’s significant fiscal deficit by limiting public spending and eliminating distortive taxes that undermine the competitiveness of goods and services in overseas markets. It attests to Macri’s increased political capital following a mid-term electoral victory on 22 October. The signing of the deal came as recent indicators point to stronger growth. The three-month average of monthly economic activity reached 4.3% year-on-year in Q3, suggesting that GDP growth accelerated notably in the quarter on the back of solid domestic demand. Strong domestic demand, however, has resulted in a widening current account deficit. This, coupled with elevated fiscal spending and a slower-than-expected drop in inflation, is putting pressure on the peso and could undermine government efforts to rein in inflation and fiscal spending.

Argentina Economic Growth

The country is set to grow at a robust pace in the next two years on higher private consumption and fixed investment, the latter of which will be supported by improving business confidence. Met the why particular panelists see the economy expanding 3.1% in 2018, which is unchanged from last month’s forecast. For 2019, growth is expected to reach 3.2%.

Argentina Economy Data

20122013201420152016
Population (million)41.742.242.743.143.6
GDP per capita (USD)13,88514,51113,13314,85412,507
GDP (USD bn)579614560641545
Economic Growth (GDP, annual variation in %)-1.02.4-2.52.6-2.2
Domestic Demand (annual variation in %)-1.34.0-3.94.0-0.7
Consumption (annual variation in %)1.13.6-4.43.5-1.4
Investment (annual variation in %)-7.12.3-6.83.8-5.1
Industrial Production (annual variation in %)-7.80.0-1.8-  -4.6
Retail Sales (annual variation in %)26.326.737.327.326.2
Unemployment Rate7.27.17.37.18.4
Fiscal Balance (% of GDP)-2.1-1.9-2.4-3.9-5.9
Public Debt (% of GDP)34.133.039.653.554.2
Money (annual variation in %)38.425.728.928.230.4
Inflation Rate (CPI, annual variation in %, eop)11.826.638.026.941.0
Inflation Rate (CPI, annual variation in %)11.018.438.026.741.2
Inflation (PPI, annual variation in %)13.114.828.3-  -  
Benchmark Interest Rate (%)12.4217.7519.6127.5618.17
Stock Market (annual variation in %)15.988.959.136.144.9
Exchange Rate (vs USD)4.926.528.4612.9415.86
Exchange Rate (vs USD, aop)4.555.488.129.2714.77
Current Account (% of GDP)-0.4-2.1-1.6-2.6-2.8
Current Account Balance (USD bn)-2.3-13.0-8.9-16.8-15.0
Trade Balance (USD billion)12.01.53.2-3.02.1
Exports (USD billion)80.076.068.456.857.7
Imports (USD billion)68.074.465.259.855.6
Exports (annual variation in %)-3.6-5.0-9.9-17.01.7
Imports (annual variation in %)-8.19.5-12.4-8.4-6.9
International Reserves (USD)43.330.631.425.638.8
External Debt (% of GDP)28.025.929.026.635.3

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Argentina Facts

ValueChangeDate
Bond Yield6.690.15 %Dec 17
Exchange Rate17.250.45 %Dec 06
Stock Market26,4702.26 %Dec 06

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